Will the Trade War Boost China’s Soybean Silk Road?
As the trade war between China and the U.S. continues, China is looking toward countries along the ancient Silk Road, such as Kazakhstan, to meet its demand for soybeans.
With a yearly need of 100 million tons of soybeans, most of which are processed into animal feed, China accounts for 60 percent of global trade. Last year, Brazil supplied approximately half of China’s imports, while the U.S. accounted for one third, and Russia, Ukraine, and other countries supplied less than 1 percent.
With an eye at diversifying its sources, and recognizing a need for alternative large-scale suppliers, China is concentrating investments into the countries associated with its “Belt and Road Initiative”. One such country, Kazakhstan, completed the Kazakh section of the China-Europe transport corridor and the dry port of Khorgos on the border with Xinjiang.
China is also focusing investment in Ukraine, however these countries have significant challenges including lacking infrastructure and poor water quality, which could see China shift its demand from soybeans to possibly corn if the trade war drags on.